Exclusive Enterprise License Does Not Confer Standing To Bring Patent Action In Licensee’s Own Name

In International Gamco, Inc. et al. v. Multimedia Games, Inc. (No. 2007-1034; October 15, 2007), the Federal Circuit reverses the District Court’s decision denying Multimedia Games, Inc.’s (“Multimedia”) motion to dismiss for lack of standing and holding that International Gamco, Inc. (“Gamco”) has standing to file suit in its own name. Gamco was assigned U.S. Patent No. 5,324,035 which is directed to a gaming system network in December 2001. Subsequently, Gamco entered into an agreement with IGT by which Gamco assigned the ‘035 patent to IGT and IGT granted to Gamco the exclusive right and license, within the “Territory”, to make, use, sell and offer to sell game system networks covered by the ‘035 patent. “Territory” was defined as the “lawful operation of lottery games authorized by the New York State Lottery in the State of New York.” Gamco subsequently sued Multimedia, the New York State Lottery’s sole contractor for lottery games for infringement of the ‘035 patent. Multimedia moved to dismiss for lack of standing and the District Court denied the motion concluding that Gamco held an exclusive enterprise license – a hybrid between a territorial license and a field of use license.

The Federal Circuit reverses, finding that an exclusive enterprise licensee, like a field of use licensee, does not hold all substantial rights in the licensed patent within the licensed territory. In so finding, the Federal Circuit concludes that Gamco’s exclusive enterprise license conveys both a territorial license and a field of use license and because the “Territory” of the license includes both geographic and field of use restrictions, Gamco’s exclusive rights must meet both conditions. The Federal Circuit states that the problem of a multiplicity of lawsuits arising from an exclusive field of use license is not cured by adding a geographic restriction. The panel declares that a field of use license apportions the subject matter of a patent and thus, subjects an infringer to suits by multiple parties because the license has split the patented subject matter among the various parties. Accordingly, the Federal Circuit concludes that the conveyance poses a threat of multiple suits based on the same allegations of infringement and Gamco lacks standing to sue in its own name without joining IGT, as an exclusive enterprise licensee does not hold all substantial rights in the full scope of the patent.